TMI Blog2019 (9) TMI 1563X X X X Extracts X X X X X X X X Extracts X X X X ..... RS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT ] on the other hand held that it is not open for the importer to pick and choose parts of the exemption notification that suits while ignoring those that don t. The Hon ble High Court of Bombay also held that Special Additional Duty of Customs is also in the nature of customs duty and it is not a duty on sale of goods. It further held that the importer does not have any vested, let alone absolute right, for refund of the SAD. There were contrary decisions - the matter was referred to a Five-Judge Constitutional Bench of the Supreme Court in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar Company [ 2018 (7) TMI 1826 - SUPREME COURT ] - the judgment of the Hon ble High Court of Bombay in the case of CMS Info System [ 2017 (1) TMI 786 - BOMBAY HIGH COURT ] is consistent with the ratio of Dilip Kumar s case, which is required to be followed, where it was held that When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The refund application of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India - 2017 (349) E.L.T. 236 (Bom.) in which the Hon ble High Court of Bombay has held that the importer has no vested right of refund and it flows only from the exemption notification and therefore all conditions of the exemption notification apply. Hence a refund claim filed after the period of one year is not admissible. 4. Both the aforesaid judgments have been appealed against before the Supreme Court. Revenue challenged the judgment of the High Court of Delhi in the case of Sony India Pvt. Ltd. (supra) and the Hon ble Supreme Court has dismissed the appeal on grounds of delay leaving the question of law open. The importer appealed against the judgment of the Hon ble High Court of Bombay in the case of CMS Info Systems Ltd. (supra) which has been admitted by the Hon ble Apex Court but not stayed. 5. Before proceeding to decide the matter, it would be profitable to examine the relevant legal provisions. Duties of Customs are levied under Section 12 of the Customs Act, 1962 at such rates as may be specified under the Customs Tariff Act, 1975 on the goods imported into or exported from India. Such levy can be based on quantity of the goods (specific rate of duty) or thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when VAT/Sales Tax paid by importer . - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty). 2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled : (a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods; (b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible; (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs; (d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be; (e) the importer shall, inter alia, provide copies of the following documents along with the refund claim : (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. 3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled. [Notification No. 102/2007-Cus., dated 14-9-2007 as amended by Notification No. 93/2008-Cus., dated 1 -8-2008] 7. The Customs Act, 1962 itself also provides for a mechanism for refund of Customs duties paid in excess. Any person who claims refund of duty of customs wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssive. The Hon ble High Court further held that but for the exemption notification, there is no right of refund vested with the importer. Para-33 of this judgment is reproduced below : 33. It is submitted that the Hon ble High Court of Delhi has clearly opined and held that the provisions of the Customs Act on the rules and mechanism for refund are incorporated by reference in Section 3(5) of the CTA only so far as may be applicable. Since SADC is levied under Section 3(5) and that is refundable only on subsequent sale, then, no limitation period can possibly be imposed for advancing a refund claim. We have carefully perused the above observations and in the light of the analysis of the statutory provisions and the scheme of refund by us, with greatest respect, we are unable to agree with the High Court of Delhi on this point. The Rules and Regulations under the provisions of the Customs Act, 1962, including those relating to drawback, refund and exemption shall so far as may be applied and this reveals that for the purposes of making an application seeking refund, its consideration, that Customs Act and its provisions are made applicable even to the Tariff Act and the duties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Once the nature of the right is considered, then, all the more we are unable to agree with Mr. Patil. There is no vested, much less absolute right in the petitioners to seek refund. Even a refund must be within the framework of the statute and admissible on the terms thereof. We are not inclined to agree with him that compliance with this period is calling upon the petitioner to do or perform something which is impossible. The exemption notification does not impose any new condition as has been read into it. It grants the exemption from payment of duty conditionally. The exemption can be availed of provided the goods which are imported are subject to payment of duties which include all the duties that are referred to in both the enactment and the notification. If the import is for subsequent sale, then, that invoice must carry a stipulation that no credit for the additional duty of customs shall be admissible. The importer thereafter can file a claim for refund of the additional duty of customs paid on the imported goods before the expiry of one year from the date of payment of additional duty of customs. At this stage, it may also be pointed that the Hon ble High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that its benefit cannot be denied simply because the importer is not able to complete his subsequent sale and avail the exemption notification within the time period prescribed. On the other hand, the Hon ble High Court of Bombay has constructed the exemption notification strictly and held that a conditional exemption notification must be viewed along with all the conditions therein and it is not open for the importer to pick and choose which conditions they would fulfil and which they would not. So the root of the case is one of interpretation of an exemption notification. 13. He fairly submits that there are a number of decisions by various judicial fora including the Hon ble Apex Court taking both liberal and strict interpretations of the exemption notifications. In view of the conflicting judgments, the matter was referred to a Five-Judge Constitutional Bench of the Supreme Court in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar Company reported in 2018 (361) E.L.T. 577 (S.C.). Paras 52 53 of the this judgment were as follows : 52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted stric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a case such as the present one, where the imports have taken place after the amendment to the notification. The Hon ble High Court of Bombay also held that the limitation under Section 27 also applies. We find that the Hon ble High Court of Delhi framed the question of law only with respect to retrospective application of the amendment but also held that the amending notification must be read down to the extent it imposes a time limit for filing the refund claim. Evidently, if an importer resells the goods and files the refund claim within the period, they will be put to loss as he will be bearing both the burden of SAD and the VAT which he would pay while selling the goods. The Hon ble High Court of Bombay on the other hand held that it is not open for the importer to pick and choose parts of the exemption notification that suits while ignoring those that don t. The Hon ble High Court of Bombay also held that Special Additional Duty of Customs is also in the nature of customs duty and it is not a duty on sale of goods. It further held that the importer does not have any vested, let alone absolute right, for refund of the SAD. We also note that the Hon ble High Court of Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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